Indeed that statement is hilarious, but, an inquiry could mean further delays in contract negotiations.
I also hate the leverage of financial aid UK is trying to use to put pressure on India for the MMRCA deal.

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If the claims about an inquiry and the comments of the DM are true, but I have some big doubts on it. Check what the same source reported earlier:

The Rafale and the Typhoon met most of the 630 technical attributes mentioned in the request for proposal (RFP) by the ministry of defence, while the others lacked either in performance or had limitations in terms of future upgrades.

&#8220;Rafale figures a notch higher than Typhoon in terms of performance and involves easier adaptability as it is logistically and operationally similar to Mirage-2000, used extensively by our boys during the Kargil conflict in 1999. The French government has also cleared the technology transfer, including the AESA (active electronically scanned array) radar,&#8221; sources in the IAF told Deccan Chronicle.

Interesting things about Rafale and MMRCA from the latest Air & Cosmos magazin:

Who could work with Dassault ?

Air & Cosmos , march 9

To fulfill the conditions of the MoD in matter of offsets, Dassault Aviation will not only work with large state firms like HAL and Bharat Electronics, the champion of Indian radars. The MoD wants also to promote the industrial private sector. Its agency for offsets, the Dofa, has referenced fifty players capable of producing equipment or systems for the Indian Rafale. These include Bharat Heavy Electricals, a diversified group which manufactures flight simulators and avionics, Larsen & Toubro (sensors, radars ...), Samtel (cockpit equipment, navigation), the latter being a partner of Thales for renovation of the Indian Mirage 2000 through a JV. There are also Alpha-ITL Electro Optics and Memory Electronics, which manufactures optronic equipment, or groups not necessarily specialists in matter of defense, like Reliance (who just signed an agreement with Dassault), Mahindra & Mahindra and Tata Power. The latter has created a division in combat systems and data link. Without forgetting ECIL, which manufactures joysticks and black boxes, or Precision Electronics, specialist in cabling.
In contrast, the Dofa list has few industrial specialized in aerostructures: there is Aurora Integrated Systems and Infra Polytec. Logically, this area is the prerogative of HAL.

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Indian Rafale: how Dassault is preparing:

Air & Cosmos , March 9

The manufacturer has six to eight months to prove it can meet the requirements of the Indian authorities in matter of offsets and technology transfers. A short delay , especially as the local industry has still many gaps to fill...

...The Indians landed at Dassault.

But the Indians are in a hurry. The MoD announced its intention to sign a definitive contract eight months after the annoucement around September-October. " Since the beginning of February, Indians have sent their best staff in St. Cloud, dozens of brilliant graduates to form working groups with Dassault teams "said a source familiar with the matter...

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Credits to Olybrius from the MP forum

Edit:

Weapon additions to the new Rafale versions will include Meteor in A2A, GBU 49 (a modernised version of the 250KG LGB Rafale uses now and GBU 24 1000Kg heavy LGB, also used as bunker busters).

Libya may procure the United Arab Emirates 68 Mirage 2000 fighters once the UAE replaces them with Rafales.

Brigadier General Abdel-Moneim said Ayad, Director of Public Relations at Libyas Interior Ministry, was quoted by the Middle East News Agency (MENA) as saying that the UAE has offered to transfer to Libya its 68 Dassault Mirage 2000s.

The UAE is considering replacing its Mirage 2000s with Rafales. Air & Cosmos magazine recently reported that all the technical and financial terms of the Rafale sale have been settled and that only a state to state defence agreement is necessary for the deal to go ahead...

Negotiations for 60 Rafale accelerate before the presidential election. The industrial control is for being put in place.

While negotiations are accelerating on the sale of 60 Rafale United Arab Emirates (UAE) - a signature before the presidential election is raised - Dassault Aviation and its subcontractors themselves in order to respond to this command. An evolution of the industrial production of Spectra self-protection system will be implemented by the end of the siteThales Elancourt (Yvelines). It corresponds to the specifications of the specifications of the Emirates....

So not only that the M2K-9 and Rafale deals are close to beeing fixed, French industry is already preparing the technical changes of Rafale according to UAEs specifications. That gives IAF and possibly IN of course also the chance to benefit from improved SPECTRA capabilities, as well as other features the UAE might fund (early Meteor integration, additional weapon stations, possibly integration of some US weapons).

I know, but instead of spending 2-3 billion, we should have got those upgraded jets.

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- UAE Mirage are available only from 2014/15 onwards, when they will get first Rafales, while our Mirage will be upgraded now
- UAE and Qatari Mirage are said to be costly although 2nd hand
- buying them instead of an upgrade, gives HAL now chance of learning to overhaul the fighters, which seems to be one of the prime interests of MoD with the upgrade

Eric Trappier (Dassault): "India is a signature of the Rafale contract in six months"

Despite the battering of BAE who tries to deliver the Eurofighter in the race, Dassault expects to conclude the first sale of Rafale abroad this year. The decision of New Delhi has had a ripple effect on other ongoing campaigns, says the director of international aircraft manufacturer.

In India, the Rafale has won the tender for the purchase of 126 combat aircraft. What could stop exclusive negotiations now?

I see no reason why we can go after and bring the Indians to stop when they have done the hard part. The procedure started in 2007. After several weeks of evaluations in extreme conditions, the slopes of the Himalayas to the desert sands, the Air Force selected two aircraft: the Rafale and Eurofighter. Ultimately, it is the lowest bid that won both in terms of unit cost of the device itself and its maintenance over time. Everything was conducted on the basis of criteria set in advance and have been scrupulously observed, without political involvement. This tender is exemplary.

When do you expect to find?

The Indians want to go fast, and considering a conclusion in about six months. We need to finalize the terms technical and industrial, and build a contract whose terms are equivalent to those of the Mirage 2000 (signed in 2000, Ed).

BAE has been suggested that the Eurofighter could get back on track ...

I do not believe, and I am surprised that some people are themselves surprised that the Rafale has prevailed. In all competitions where the two planes were opposed, the Eurofighter has been eliminated in the first round, as in Korea, the Netherlands, and Brazil, where he was ranked behind the Rafale, as in India. Or in Switzerland, as evidenced by the evaluation report of the armed forces published in the press. I add that the calculations of the Court of Accounts UK show that the Eurofighter is much more expensive. Operationally then, the Rafale has proved its versatility during Operation Harmattan, unlike the Eurofighter was conceived as a pure fighter. The tender has appointed Indian clearly the best aircraft.

At what price? Have you offered cheaper than that sold to France?

The price of the Rafale in India is offered at French prices, adjusted for expenses related to the contract since it is not quite the same technical configuration, and that manufacturing will be in part locally. The competition was so tough that each side had to offer the best possible price. That said, we have not done dumping to win. A iso-conditions, we proposed the price of French Rafale.
Of the 126 units planned, only 18 will be manufactured in France. Should we expect limited industrial benefits?

The IRB will not match the production of 126 Rafale in France, but not to build a few copies. Technology transfer will be done gradually and there will be no global licensing agreement, but licensing agreements for each device. In other words, each device will live his own life and its production in India will obey a rise own. The goal is that India is capable of manufacturing Rafale, but there will always be some activity in France. On the whole, the contract will employ tens of thousands of people...

...The Rafale is again given winner in Brazil. Or is tendering?

The choice of New Delhi has had a ripple effect on our other campaigns. We do not overestimate, but we do not underestimate either, because it allows us to pass a number of messages. Following a procedure very professional, India has rejected our competitors American, Russian, Swedish and European. This is not indifferent to the country that launched a tender. As in Brazil, where the Rafale is opposed to Boeing's F-18 and Saab Gripen, who both were eliminated in the first round in India. That said, today, the tender in Brazil remains frozen. The ball is in the camp of the Brazilian government.

- UAE Mirage are available only from 2014/15 onwards, when they will get first Rafales, while our Mirage will be upgraded now
- UAE and Qatari Mirage are said to be costly although 2nd hand
- buying them instead of an upgrade, gives HAL now chance of learning to overhaul the fighters, which seems to be one of the prime interests of MoD with the upgrade

So it's not that easy as it seems.

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If they will give us with weapon package, whats the issue....the price of upgrade,suppose 2 billion (which allotted to upgrade Indian M2Ks) can be useful to buy at least 50 such UAE M2ks @40 million. (even without weapon package, it is okay) and about the timeline..we will complete the upgrade only in 2020. So why not buying those second hand? Note that UAESF's Mirages are not as old as Indian M2ks. we are using M2ks for decades and there will not be any air frame change in our proposed upgrade.

India is in final negotiations with Dassault Aviation, a French aircraft manufacturer of military and business jets, for supply of 126 Rafale fighters.

The Indian Air Force plans to dispose of its Mikoyan MiG-21 aircraft from 2014 and replace them with Rafale fighters. Although the Mikoyan MiG-21s are popular among pilots, they are now obsolete and there have been several fatal crashes in recent years.

Mikoyan MiG-21, India's current fighter fleet.

The Indian Defence Ministry announced that Dassault secured an "L1 vendor" status after being selected as the lowest-price bidder who complied with all the requirements in the medium multi-role combat aircraft (MMRCA) competition.

With "L1 vendor" status, Dassault is now conducting final negotiations for the deal with India's Contract Negotiation Committee (CNC), which consists of the defence program&#8217;s main stakeholders, namely the Indian air force and Hindustan Aeronautics; a state-owned company managed by the Indian Ministry of Defence. The company will build some of the Rafale fighters domestically.

Hindustan Aeronautics manufactures and assembles aircraft from its base in Bangalore, and is one of Asia's largest aerospace companies. The negotiations between Dassault and the CNC are expected to take 6-12 months.

The value of the MMRCA contest is estimated to be between $10 billion and $20 billion. Other competing aircrafts were Eurofighter Typhoon, Boeing F/A-18E/F Super Hornet, RSK MiG-35, Lockheed Martin F-16IN Super Viper and Saab Gripen NG. Rafale was selected as the preferred aircraft.

The Indian Defence Ministry officials dismissed false reports in Indian publications that stated there were concerns about the Rafale's life-cycle

That's speculation my friend, half of them are brand new and UAE just cleared another upgrade for several 100 millions, so don't expect them to be cheap at all. We I remember correctly, Qatar asked around $700 millions for the 12 x Mirage 2000-5s! And as mentioned, the most important point of IAF / MoD seems to be the upgrade at HAL, while I would have prefered an upgrade at Dassault, cheaper and faster.

That's a media myth, why on earth should HAL need 8 years to upgrade less than 50 fighters, when they plan to licence produce 108 Rafales in 7 years? The same BS that was reported about the $500 millions for an upgrade facility, nothing of that was confirmed so far, just like the MICA deal.

New Delhi: The first squadron of Medium-Multi Role Combat Aircraft (MMRCA) consisting of 18 aircraft is expected to be inducted into the IAF within three to four years of signing of the contract with its supplier.

In reply to a question on delivery of MMRCA, Defence Minister A K Antony told Lok Sabha today, "First squadron of MMRCA consisting of 18 aircraft is expected to be inducted within three to four years of signing of contract."

"The remaining 108 aircraft will be manufactured under license by Hindustan Aeronautical Limited (HAL) and are expected to be inducted over the following seven years," he said...

The contract will be signed this year for sure, reports from France clearly shows that we want to speed up the negotiations, which means that the first squad will be available by 2015. Personally I think the French will be able to deliver it earlier too, but we will see how long IAF needs to set up training and logistical support.